All entities offering virtual-asset services in or from Kenya, such as cryptocurrency exchanges, wallet providers and token platforms, would be required to obtain licences and operate under designated oversight.
“This is a landmark moment for Kenya’s financial ecosystem. It provides clarity, promotes innovation, and protects consumers from fraudulent digital schemes,” said Finance and National Planning Committee chair Kimani Kuria.
The text defines a virtual-asset service provider as a company licensed to offer such services in or from Kenya. Only companies limited by shares, local firms or foreign entities registered under the Companies Act qualify for licensing.
The Bill, first tabled in April 2025, passed Second Reading on June 24, proceeded through the Committee of the Whole House in early October, and was approved at Third Reading last week.
Parliament also reshaped the governance model. An earlier proposal to create a new standalone Virtual Assets Regulatory Authority (VARA) was dropped in favour of a coordinated licensing approach with existing regulators, which lawmakers said would avoid duplicating mandates and reduce legal ambiguity. The National Treasury retains reserve powers to establish a separate authority in future if needed.
The framework sets operational safeguards for VASPs, including maintaining adequate protections for client assets, taking out insurance cover, opening bank accounts within Kenya for supervisory visibility, instituting conflict-of-interest policies and keeping detailed records.
Regulators will have powers to inspect, supervise and sanction non-compliant operators. The regime aligns with global standards by extending anti-money-laundering obligations to counter-terrorist and counter-proliferation financing risks.
The legislative push follows the Finance Act 2025, which repealed the 3% Digital Asset Tax and introduced a 10% excise duty on fees charged by virtual-asset platforms—shifting taxation from asset value to service charges.
On the ground, use cases continue to emerge. In Kibera, a community-run “bitcoin circular economy” has processed more than 2,000 small transactions to date. USSD tools such as Machankura allow basic-phone users to send or receive small amounts of bitcoin without mobile data. Local on-ramps like Bitika integrate M-Pesa for purchases, and payments firms are piloting point-of-sale flows to make spending sats feel as familiar as mobile money.
If assented to, the law would mark Kenya’s first formal recognition of virtual assets and service providers. Regulators are expected to issue subsidiary regulations with licensing procedures, disclosure requirements, compliance timelines and transition measures for existing operators.
Upon enactment, Kenya would join peers such as South Africa, Nigeria and Mauritius that have already established legal frameworks for digital assets.
